Airbus Secures Virgin America as First Firm A320NEO Customer

Virgin America is signing up as the first firm customer for the AirbusA320 new engine option (NEO), becoming the lead operator for the aircraft.

At the Farnborough air show in July, Airbus and Virgin America signed a memorandum of understanding for 40 A320s and 20 options. Virgin America’s deal was finalized for all 60 units as firm orders on December 29. The order is split between A320s and NEOs.

The order gives Virgin America “the benefits of a new aircraft without the headaches of a new aircraft,” says airline CEO David Cush. He sees little risk with it being a new type, noting the airframe is existing.

Virgin America’s new order is split between 30 A320NEOs and 30 regular A320s, although bought with the addition of the winglets coming available next year.

For Airbus, it is also a milestone deal, marking the 10,000th aircraft order for the European aircraft maker, company CEO Tom Enders notes.

Cush notes that Virgin America now operates 34 aircraft, with 17 more to come by the end of the first quarter of 2012 – both from lessors and Airbus. The first aircraft from this order will arrive in 2013, with the first NEO due in 2016. Cush notes the airline now has the possibility to grow to a fleet of more than 110 by 2019, although that decision has not been taken.

Cush also notes that the NEO’s 500 mi. of extra range was a factor in the decision, in part because it opens west coast to Hawaii routes given extended-range twin-engine operations requirements.

The deal with Virgin America follows an agreement last week between Airbus and Indian low-fare carrier IndiGo to buy 180 A320s, including 150 “NEOs.” The carrier is the first announced customer for the NEO, although Virgin America’s deal was finalized on December 29 and is firm, unlike the commitment for the Indian customer.

The NEO is due to enter service in the first quarter of 2016.

Airbus is offering the NEO with either CFM InternationalLeap-X or Pratt & Whitney PW1100G engines. Virgin American and IndiGo both have yet to make their engine selection. Cush hopes to have an engine decision in May, and will start the dialogue with engine makers in about 30 days.

How Virgin America will decide is unclear. Cush notes that the Pratt & Whitney geared turbofan will be flying well before the NEO enters service, helping to reduce risk. However, the airline currently is a CFM56 operator, so has a relationship with that supplier.